Government Shutdown and UAW Expansion Rattle Investors

Renewed concerns over a potential government shutdown and the expansion of the UAW strike have sent shockwaves through the financial markets, leaving investors on edge. This follows a recent period of market turbulence driven by the Federal Reserve's hawkish stance.

Key Factors for Today

• Market anxiety grows as the spectre of a government shutdown and UAW strike expansion looms large.
• The rejection of Speaker Kevin McCarthy's funding bill by House Republicans heightens uncertainty, boosting the US Dollar and Gold.
• German Manufacturing shows signs of improvement but remains stuck in contraction territory.
• The British Pound hits a 6-month low due to disappointing UK Services PMI figures.
• Asian markets experience a rally fuelled by China IPO rumours, sparking a renewed appetite for risk.

Market Movers

• US Dollar and Gold both rise amid market uncertainty.
• House Republicans' second rejection of the funding bill sparks fears of a government shutdown.
• UAW's expanded strikes at 38 GM and Stellantis facilities deepen market unease.
• Mixed Global PMIs, with weaker services but improved manufacturing (still in contraction), bolster the US Dollar while Gold reflects rising uncertainty; Gold's potential range: $1913 to $1930 per ounce.

Economic Calendar

• CA Housing Starts
• NAHB Housing Market Index
• Net Long-term TIC Flows

The Big News

German Manufacturing PMI Inches Up but Stays in Contraction

German Manufacturing PMI, though showing signs of improvement by climbing from an expected 39.1 to 39.8, remains mired in contraction territory, far from the crucial 50 threshold. Services, too, witnessed a modest uptick, rising from 47.9 to 49.8. In the broader Euro Area, Manufacturing slipped from 43.5 to 43.4, falling short of economists' expectations of 44, with last month's figure revised downward from 43.7. This, combined with a strengthening US Dollar, pushed the EUR/USD pair to a new low of $1.0615 in March before a partial recovery, ending the day slightly lower. A loss of swing support may set the stage for a further dip to $1.06, while a bullish push could propel prices to $1.0686.

UK Services PMI Disappointment Drives Cable to 6-Month Low

On the other side of the Atlantic, the British Pound, known as Cable, tumbled to a fresh 6-month low of $1.2235 following disappointing UK Services PMI figures. Although UK Manufacturing PMIs posted solid results, the Services sector's decline to 47.2, well below expectations of 49.3, raised concerns about a potential UK recession. Cable closed lower for the third consecutive session on Friday, with investors focusing on the key support level of 1.2180, while $1.23 looms as a formidable resistance.

US-Listed Stocks Rally on China's Potential Rule Easing

In a surprising turn of events, US-listed stocks experienced a rally on Friday. Reports suggesting that China might ease rules limiting foreign ownership of publicly traded companies breathed new life into the market. The Hang Seng index surged by 2.70% in response to the news, briefly surpassing the 18,000 mark. However, profit-taking pressures have since caused it to retreat, with 17,580 now serving as a critical support level.